Exhibit 10.1


 


HOSPIRA
SUPPLEMENTAL PENSION PLAN


 


(Effective as of May 1,
2004)


 

















 


HOSPIRA
SUPPLEMENTAL PENSION PLAN


 


Section
1

INTRODUCTION


 


1-1.          Pursuant to a Separation
and Distribution Agreement by and between Abbott Laboratories (“Abbott”) and
Hospira, Inc.  (“Hospira”) dated as of
April 12 2004, Abbott distributed as a dividend to its shareholders all of the
outstanding shares of common stock, par value $0.01 per share, of Hospira,
together with the associated preferred stock purchase rights, owned by Abbott
(the “Distribution”).  In connection
with the Distribution, Hospira established the Abbott/Hospira Transitional
Annuity Retirement Plan (the “Annuity Plan”) and certain assets and liabilities
were transferred from the Abbott Laboratories Annuity Retirement Plan (the
“Abbott ARP”) to the Annuity Plan with respect to persons who were transferred
from employment with Abbott to employment with Hospira in connection or
contemporaneously with the Distribution (“Transferred Employees”).  In connection with the Distribution, Hospira
also assumed certain liabilities with respect to Transferred Employees under
the Abbott Laboratories Supplemental Pension Plan (the “Abbott SERP”).  Hospira now desires to establish this HOSPIRA
SUPPLEMENTAL PENSION PLAN (the “Supplemental Plan”) to provide (i) the benefits
associated with the obligations assumed by Hospira with respect to Transferred
Employees under the Abbott SERP, (ii) pension benefits calculated under the
Annuity Plan in excess of those which may be paid under that plan under the
limits imposed by Section 415 of the U.S. 
Internal Revenue Code of 1986, as amended (the “Code”), and the Employee
Retirement Income Security Act, as amended (“ERISA”), and (iii) the additional
pension benefits that would be payable under the Annuity Plan if deferred
awards under the Performance Incentive Plan and, with respect to any
Transferred Employee, under the Management Incentive Plan prior to the
Effective Date (as defined below) were included in “final earnings” as defined


 


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in
the Annuity Plan  This Supplemental
Plan is established effective as of May 1, 2004 (the “Effective Date”).


 


1-2.          The Supplemental Plan
shall apply to employees of Hospira and its subsidiaries and affiliates
existing as of the Effective Date or thereafter created or acquired.  (Hospira and each of such subsidiaries and
affiliates are hereinafter referred to as an “employer” and collectively as the
“employers”).


 


1-3.          All benefits provided
under the Supplemental Plan shall be provided from the general assets of the
employers and not from any trust fund or other designated asset.  All participants in the Supplemental Plan
shall be general creditors of the employers with no priority over other
creditors.


 


1-4.          The Supplemental Plan
shall be administered by the Hospira, Inc. Employee Benefit Board of Review  appointed by the Board of Directors of
Hospira (the “Board of Directors”) and acting under the Charter of the Hospira,
Inc. Employee Benefit Board of Review (“Board of Review”).  Except as stated below, the Board of Review
shall perform all powers and duties with respect to the Supplemental Plan,
including the power to direct payment of benefits, allocate costs among
employers, adopt amendments and determine questions of interpretation.  The Board of Directors shall have the sole
authority to terminate the Supplemental Plan.


 


Section
2

ERISA ANNUITY PLAN SUPPLEMENTAL BENEFIT


 


2-1.          The benefits described
in this Section 2 shall apply to all participants in the Annuity Plan who
retire, or terminate with a vested pension under that plan, on or after the
Effective Date.


 


2-2.          Each Annuity Plan
participant whose retirement or vested pension under that plan would otherwise
be limited by Section 415 of the Internal Revenue Code shall receive a


 


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supplemental
pension under this Supplemental Plan in an amount, which, when added to his or
her Annuity Plan pension, will equal the amount the participant would be
entitled to under the Annuity Plan as in effect from time to time, based on the
particular option selected by the participant, without regard to the
limitations imposed by Section 415 of the Internal Revenue Code.


 


Section
3

1986 TAX REFORM ACT SUPPLEMENTAL BENEFIT


 


3-1.          The benefits described
in this Section 3 shall apply to all participants in the Annuity Plan who
retire, or terminate with a vested pension under that plan after the Effective
Date.


 


3-2.          Each Annuity Plan
participant shall receive a supplemental pension under this Supplemental Plan
in an amount equal to the difference, if any, between:


 


(a)           the monthly benefit
payable under the Annuity Plan plus any supplement provided by Section 2; and


 


(b)           the monthly benefit
which would have been payable under the Annuity Plan (without regard to the
limits imposed by Section 415 of the Internal Revenue Code) if the
participant’s “final earnings”, as defined in the Annuity Plan, had included
compensation in excess of the limits imposed by Section 401(a)(17)of the Internal
Revenue Code, and any “pre-tax contributions” made by the participant under the
Hospira Supplemental 401(k) Plan.


 


For purposes
of calculating the benefit under this Section 3-2 with respect to any
Transferred Employee, any pre-tax contributions made by the participant under
the Abbott Laboratories Supplemental 401(k) Plan prior to the Effective Date
shall be treated as though made under the Hospira Supplemental 401(k) Plan.


 


Section
4

DEFERRED COMPENSATION PLAN ANNUITY PLAN SUPPLEMENTAL BENEFIT


 


4-1.          The benefits described
in this Section 4 shall apply to all participants in the Annuity Plan who
retire, or terminate with a vested pension, under that plan, on or after the


 


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Effective
Date and who made a Deferral Election under the Abbott Laboratories Deferred
Compensation Plan (the “Deferred Compensation Plan”) with respect to any
calendar month during the one hundred twenty consecutive calendar months
immediately preceding retirement or termination of employment.  For
purposes of calculating the benefit under this Section 4 with respect to any
Transferred Employee, amounts deferred under the Abbott Laboratories Deferred
Compensation Plan prior to the Effective Date shall be treated as deferred
under the Deferred Compensation Plan.


 


4-2.          Each Annuity Plan
participant shall receive a supplemental pension under this Supplemental Plan
in an amount equal to the difference, if any, between:


 


(a)           the monthly benefit
payable under the Annuity Plan plus any supplement provided by Section 2 and
Section 3; and


 


(b)           the monthly benefit
which would have been payable under the Annuity Plan (without regard to the
limits imposed by Section 415 of the Internal Revenue Code) if the
participant’s “base earnings”, as defined in the Annuity Plan, included
deferrals made under the Deferred Compensation Plan and any compensation in
excess of the limits imposed by Section 401(a)(17)of the Internal Revenue Code


 


Section
5

DEFERRED MIP ANNUITY PLAN SUPPLEMENTAL BENEFIT


 


5-1.          The benefits described
in this Section 5 shall apply to all participants in the Annuity Plan who
retire, or terminate with a vested pension, under that plan, on or after the
Effective Date and who were awarded Performance Incentive Plan awards for any
calendar year during the ten consecutive calendar years ending with the year of
retirement or termination of employment. 
For purposes of calculating the benefits under this Section 5 with
respect to any Transferred Employee, awards and payments made prior to the
Effective Date under the Management Incentive Plan, Awards for Performance
Excellence Plan or any Division Incentive Plan maintained by Abbott shall be
treated as awards and payments, as applicable, under the


 


5

















 


Performance
Incentive Plan, Awards for Performance Excellence or a Division Incentive Plan
maintained by Hospira after the Effective Date.


 


5-2.          Each Annuity Plan
participant shall receive a supplemental pension under this Supplemental Plan
in an amount determined as follows:


 


(a)           The supplemental
pension shall be the difference, if any, between:


 


(i)            the monthly benefit
payable under the Annuity Plan plus any supplement provided by Section 2,
Section 3, and Section 4; and


 


(ii)           the monthly benefit which
would have been payable under the Annuity Plan (without regard to the limits
imposed by Section 415 of the Internal Revenue Code) if the participant’s
“final earnings”, as defined in the Annuity Plan, were one-sixtieth of the sum
of:


 


(A)          the participant’s total
“basic earnings” (excluding any payments under the Performance Incentive Plan,
Awards for Performance Excellence Plan or any Division Incentive Plan) received
in the sixty consecutive calendar months for which his basic earnings
(excluding any payments under the Performance Incentive Plan, Awards for
Performance Excellence Plan or any Division Incentive Plan) were highest within
the last one hundred twenty consecutive calendar months immediately preceding
his retirement or termination of employment; and


 


(B)           the amount of the
participant’s total awards under the Performance Incentive Plan, Awards for
Performance Excellence Plan and any Division Incentive Plan (whether paid
immediately or deferred) made for the five consecutive calendar years during
the ten consecutive calendar years ending with the year of retirement or
termination for which such amount is the greatest and (for participants granted
Performance Incentive Plan awards for less than five consecutive calendar years
during such ten year period) which include all Performance Incentive Plan
awards granted for consecutive calendar years within such ten year period.


 


(b)           That portion of any
Performance Incentive Plan award which the Compensation Committee has
determined shall be excluded from the participant’s “basic earnings” shall be
excluded from the calculation of “final earnings” for purposes of this Section
5-2 and that portion of any award under the Management Incentive Plan which,
prior to the Effective Date, the Compensation Committee of Abbott had
determined would be excluded from a Transferred Employee’s “basic earnings”
shall be excluded from the calculation of “final earnings” for purposes of this
Section 5-2.  “Final earnings” for
purposes of this subsection 5-2 shall


 


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include any
compensation in excess of the limits imposed by Section 401(a)(17)of the
Internal Revenue Code.


 


(c)           In the event the period
described in subsection 5-2(a)(ii)(B) is the final five calendar years of employment
and a Performance Incentive Plan award is made to the participant subsequent to
retirement for the participant’s final calendar year of employment, the
supplemental pension shall be adjusted by adding such new award and subtracting
a portion of the earliest Performance Incentive Plan award included in the
calculation, from the amount determined under subsection 5-2(a)(ii)(B).  The portion subtracted shall be equal to
that portion of the participant’s final calendar year of employment during
which the participant was employed by Hospira; provided, however, that in the
case of any Transferred Employee whose termination occurs in 2004, the portion
of the participant’s final calendar year of employment for this purpose shall
include any portion of 2004 that the participant was employed by Abbott.  If such adjustment results in a greater
supplemental pension, the greater pension shall be paid beginning the first
month following the date of such new award.


 


Section
6

CORPORATE OFFICER ANNUITY PLAN SUPPLEMENTAL BENEFIT


 


6-1.          The benefits described
in this Section 6 shall apply to all participants in the Annuity Plan who are
corporate officers of Hospira as of the Effective Date or who become corporate
officers thereafter, and who retire, or terminate with a vested pension under
that plan on or after the Effective Date. 
The term “corporate officer” for purposes of this Supplemental Plan
shall mean an individual elected an officer of Hospira by its Board of
Directors (or designated as such for purposes of this Section 6 by the
Compensation Committee of the Board of Directors of Hospira), but shall not
include assistant officers. 
Notwithstanding the foregoing or any other provision of this
Supplemental Plan to the contrary, in the case of any Transferred Employee who
was a corporate officer of Abbott immediately prior to the Effective Date and
who is not a corporate officer of Hospira on or after the Effective Date,
benefits shall be provided under this Section 6.


 


6-2.          Subject to the
limitations and adjustments described below, each participant described in
subsection 6-1 shall receive a monthly supplemental pension under this


 


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Supplemental
Plan commencing on the participant’s normal retirement date under the Annuity
Plan and payable as a life annuity, equal to 6/10 of 1 percent (.006) of the
participant’s final earnings (as determined under subsection 5-2) for each of
the first twenty years of the participant’s benefit service (as defined in the
Annuity Plan) occurring after the participant’s attainment of age 35.


 


6-3.          In no event shall the
sum of (a) the participant’s aggregate percentage of final earnings calculated
under subsection 6-2 and (b) of the participant’s aggregate percentage of final
earnings calculated under subsections 5.1(a)(ii)(A) and 5-1(b)(i)of the Annuity
Plan, exceed the maximum aggregate percentage of final earnings allowed under
subsection 5-1  of the Annuity Plan
(without regard to any limits imposed by the Internal Revenue Code), as in effect
on the date of the participant’s retirement or termination.  In the event the limitation described in
this subsection 6-3 would be exceeded for any participant, the participant’s
aggregate percentage calculated under subsection 6-2 shall be reduced until the
limit is not exceeded.


 


6-4.          Subject to the
provisions of subsection 6.1 with respect to any Transferred Employee who is
not a corporate officer of Hospira on or after the Effective Date, benefit
service occurring during any period that a participant is not a corporate
officer of Hospira or was not a corporate officer of Abbott Laboratories prior to the
Effective Date  shall be disregarded in calculating the participant’s
aggregate percentage under subsection 6-2.


 


6-5.          Any supplemental pension
otherwise due a participant under this Section 6 shall be reduced by the amount
(if any) by which:


 


(a)           the sum of (i) the
benefits due such participant under the Annuity Plan and this Supplemental
Plan, plus (ii) the actuarially equivalent value of the employer-paid portion
of all benefits due such participant under the primary retirement plans of all
non-Hospira employers of such participant; exceeds


 


(b)           the maximum benefit
that would be due under the Annuity Plan (without regard to the limits imposed
by Section 415 of the Internal Revenue Code) based on the


 


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participant’s
final earnings (as determined under subsection 5-2), if the participant had
accrued the maximum benefit service recognized by the Annuity Plan.


 


The term “primary retirement plan” shall mean any
pension benefit plan as defined in ERISA, whether or not qualified under the
Internal Revenue Code, which is determined by the Board of Review to be the
primary pension plan of its sponsoring employer.  The term “non-Hospira employer” shall mean any employer other
than Hospira or a subsidiary or affiliate of Hospira.  A retirement plan maintained by an employer prior to such
employer’s acquisition by Hospira shall be deemed a retirement plan maintained
by a non-Hospira employer for purposes of this subsection 6-5.


 


6-6.          Any supplemental pension
due a participant under this Section 6 shall be actuarially adjusted as
provided in the Annuity Plan to reflect the pension form selected by the
participant and the participant’s age at commencement of the pension, and shall
be paid as provided in subsection 7-2.


 


Section
7

CORPORATE OFFICER ANNUITY PLAN

SUPPLEMENTAL EARLY RETIREMENT BENEFIT


 


7-1.          The benefits described
in this Section 7 shall apply to all persons described in subsection 6-1.


 


7-2.          The supplemental pension
due under Sections 2, 3, 4, 5 and 6 to each participant described in subsection
7-1 shall be reduced as provided in subsections 5-3 and 5-6 of the Annuity Plan
for each month by which its commencement date precedes the last day of the
month in which the participant will attain age 60.  No reduction will be made for the period between the last day of
the months the participant will attain age 60 and age 62.


 


7-3.          Each participant
described in subsection 7-1 shall receive a monthly supplemental pension under
this Supplemental Plan equal to any reduction made in such participant’s
Annuity


 


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Plan
pension under subsections 5-3 or 5-6 of the Annuity Plan for the period between
the last day of the months the participant will attain age 60 and age 62.


 


Section
8

MISCELLANEOUS


 


8-1.          For purposes of this
Supplemental Plan, the term “Performance Incentive Plan” shall mean the Hospira
2004 Performance Incentive Plan and any successor plans to such plan, and the
term “Management Incentive Plan” shall mean  the Abbott Laboratories Management Incentive Plan and
any successor plans to such plan.


 


8-2.          The supplemental pension
described in Sections 2, 3, 4, 5, 6 and 7 shall be paid to the participant or
his or her beneficiary based on the particular pension option elected by the
participant, in the same manner, at the same time, for the same period and on
the same terms and conditions as the pension payable to the participant or his
beneficiary under the Annuity Plan.  In
the event a participant is paid his or her pension under the Annuity Plan in a
lump sum, any supplemental pension due under Sections 2, 3, 4, 5, 6 or 7 shall
likewise be paid in a lump sum. 
Notwithstanding the foregoing provision of this subsection 8-2: if the
monthly vested supplemental pensions, expressed as a straight life annuity, due
a participant or his or her beneficiary under Sections 2, 3, 4, 5, 6 and 7 do
not exceed an aggregate of One Hundred Fifty Dollars ($150.00) as of the
commencement date of the pension payable such participant or his or her
beneficiary under the Annuity Plan, then the present value of such supplemental
pensions shall be paid such participant or beneficiary in a lump-sum.


 


8-3.          Notwithstanding any
other provisions of this Supplemental Plan, if employment of any participant
with Hospira and its subsidiaries and affiliates should terminate for any
reason within five (5) years after the date of a Change in Control:


 


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(a)           The present value of
any supplemental pension due the participant under Section 2 (whether or not
then payable) shall be paid to the participant in a lump sum within thirty (30)
days following such termination; and


 


(b)           The present value of
any supplemental pension due the participant under Sections 3, 4 or 5 (whether
or not then payable) shall be paid to the participant in a lump sum within
thirty (30) days following such termination.


 


The supplemental pension described in paragraph (a)
shall be computed using as the applicable limit under Section 415 of the
Internal Revenue Code, such limit as is in effect on the termination date and
based on the assumption that the participant will receive his or her Annuity
Plan pension in the form of a straight life annuity with no ancillary
benefits.  The present values of the
supplemental pensions described in paragraphs (a) and (b) shall be computed as
of the date of payment by using an interest rate equal to the applicable
interest rate as defined in section 417(e) of the Code and as determined for
purposes of the Annuity Plan as of the date of payment.


 


8-4.          For purposes of
subsection 8-3, a “Change in Control” shall be deemed to have occurred on the
earliest of the following dates:


 


(a)           the date any Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of
Hospira (not including in the securities beneficially owned by such Person any
securities acquired directly from Hospira or its Affiliates) representing 20%
or more of the combined voting power of Hospira’s then outstanding securities,
excluding any Person who becomes such a Beneficial Owner in connection with a
transaction described in clause (i) of paragraph (c) below; or


 


(b)           the date the following
individuals cease for any reason to constitute a majority of the number of
directors then serving: individuals who, on the date hereof, constitute the
Board of Directors and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of Hospira) whose appointment or election by the Board of
Directors or nomination for election by Hospira’s shareholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or recommended;
or


 


(c)           the date on which there
is consummated a merger or consolidation of Hospira or any direct or indirect
subsidiary of Hospira with any other corporation or other


 


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entity, other than
(i) a merger or consolidation (A) immediately following which the individuals
who comprise the Board of Directors immediately prior thereto constitute at
least a majority of the Board of Directors of Hospira, the entity surviving
such merger or consolidation or, if Hospira or the entity surviving such merger
or consolidation is then a subsidiary, the ultimate parent thereof and (B)
which results in the voting securities of Hospira outstanding immediately prior
to such merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or any parent thereof), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of Hospira
or any subsidiary of Hospira, at least 50% of the combined voting power of the
securities of Hospira or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of Hospira (or similar
transaction) in which no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of Hospira (not including in the securities
Beneficially Owned by such Person any securities acquired directly from Hospira
or its Affiliates) representing 20% or more of the combined voting power of
Hospira’s then outstanding securities; or


 


(d)           the date the
shareholders of Hospira approve a plan of complete liquidation or dissolution
of Hospira or there is consummated an agreement for the sale or disposition by
Hospira of all or substantially all of Hospira’s assets, other than a sale or
disposition by Hospira of all or substantially all of Hospira’s assets to an
entity, at least 50% of the combined voting power of the voting securities of
which are owned by shareholders of Hospira, in combination with the ownership
of any trustee or other fiduciary holding securities under an employee benefit
plan of Hospira or any subsidiary of Hospira, in substantially the same
proportions as their ownership of Hospira immediately prior to such sale.


 


Notwithstanding the foregoing, a “Change in Control” shall not be
deemed to have occurred by virtue of the consummation of any transaction or
series of integrated transactions immediately following which the record
holders of the common stock of Hospira immediately prior to such transaction or
series of transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the assets of
Hospira immediately following such transaction or series of transactions.  In no event shall the Distribution be
considered a Change in Control for purposes of this Supplemental Plan.


 


For purposes of this Supplemental Plan: “Affiliate” shall have the
meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange
Act; “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under
the Exchange Act; “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended from time to time; and “Person” shall have the meaning given
in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof, except that such term shall not include (i) Hospira or any
of its subsidiaries, (ii) a trustee or other fiduciary holding securities under
an employee benefit plan of Hospira or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a


 


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corporation owned, directly or indirectly, by the shareholders of
Hospira in substantially the same proportions as their ownership of stock of
Hospira.


 


8-5.          POTENTIAL CHANGE IN
CONTROL.  A “Potential Change in
Control” shall exist during any period in which the circumstances described in
paragraphs (a), (b), (c) or (d), below, exist (provided, however, that a
Potential Change in Control shall cease to exist not later than the occurrence
of a Change in Control):


 


(a)           Hospira enters into an
agreement, the consummation of which would result in the occurrence of a Change
in Control, provided that a Potential Change in Control described in this
paragraph (a) shall cease to exist upon the expiration or other termination of
all such agreements.


 


(b)           Any Person (without
regard to the exclusions set forth in subsections (i) through (iv) of such
definition) publicly announces an intention to take or to consider taking
actions the consummation of which would constitute a Change in Control; provided
that a Potential Change in Control described in this paragraph (b) shall cease
to exist upon the withdrawal of such intention, or upon a determination by the
Board of Directors that there is no reasonable chance that such actions would
be consummated.


 


(c)           Any Person becomes the
Beneficial Owner, directly or indirectly, of securities of Hospira representing
10% or more of either the then outstanding shares of common stock of Hospira or
the combined voting power of Hospira’s then outstanding securities (not
including in the securities beneficially owned by such Person any securities
acquired directly from Hospira or its Affiliates).


 


(d)           The Board of Directors
adopts a resolution to the effect that, for purposes of this Agreement, a
Potential Change in Control exists; provided that a Potential Change in Control
described in this paragraph (d) shall cease to exist upon a determination by
the Board of Directors that the reasons that gave rise to the resolution
providing for the existence of a Potential Change in Control have expired or no
longer exist.


 


In no event shall the Distribution be considered a Potential Change in
Control for purposes of this Supplemental Plan.


 


8-6.          The provisions of
subsections 8-3, 8-4, 8-5 and this subsection 8-6 may not be amended or
deleted, nor superseded by any other provision of this Supplemental Plan, (i)
during the pendency of a Potential Change in Control and (ii) during the period
beginning on the date of a Change in Control and ending on the date five (5)
years following such Change in Control.


 


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8-7.          All benefits due under
this Supplemental Plan shall be paid by Hospira and Hospira shall be reimbursed
for such payments by the employee’s employer. 
In the event the employee is employed by more than one employer, each
employer shall reimburse Hospira in proportion to the period of time the
employee was employed by such employer, as determined by the Board of Review in
its sole discretion.


 


8-8.          The benefits under the
Supplemental Plan are not in any way subject to the debts or other obligations
of the persons entitled to benefits and may not be voluntarily or involuntarily
sold, transferred or assigned.


 


8-9.          Nothing contained in
this Supplemental Plan shall confer on any employee the right to be retained in
the employ of Hospira or any of its subsidiaries or affiliates.


 


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